CERTIFICATION

The research project entitled THE IMPACT OF COMPUTERIZED ACCOUNTING

SYSTEM ON FINANCIAL REPORT MICRO FINANANCE INSTITUTION THE
CASE OF BAPCCUL by RAHNMEH KEVIN BOBUIN, meets the requirements and
regulation governing the award of a Bachelor Degree in Business Administration in
Accountancy in HIHER INSTITITUDE OF PROFESSIONALISM AND
TECHNOLOGY BAFOUSSAM, and is therefore approved for its contribution to
scientific knowledge and presentation.

PROJECT SUPERVISOR PROFESSIONAL SUPERVISOR

NAME……………………………………………………… NAME………………………………………………………

DATE………………………………………………………… DATE…………………………………………………………

SIGNATURE………………………………………………. SIGNATURE……………………………………………….

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 DECLARATION

I hereby declare that this project entitled THE IMPACT

OF COMPUTERIZED ACCOUNTING SYSTEM ON FINANCIAL
REPORT OF MICRO FINANACE INSTITUTTION, is on original
work and it is record of my own research efforts. It has been presented
before either in part or as whole for any diploma or certificate or any
academic presentation. All borrowed ides have been duly acknowledged
by means of references.

STUDENT NAME……………………………………....................
SIGNATURE………………………………………………………………

DATE…………………………………………………………………………

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 ACKNOWLEGEMENTS

I want to use this opportunity to express my special gratitude to my academic supervisor

who have been my inspiration and for taking his time to go through my manual script from
the very first day to the end guiding and correcting my work.

To all my teachers and course mate for being there and supporting me to overcome the
challenges and to ensure the realisation of this project.

I wish to express my special gratitude to my beloved Parents and to the entire family, my
Siblings, my and to everyone who supported me financially or morally from the very first
beginning to this moment to become who I am today.

To the entire Staffs who impacted me with knowledge in other to achieved this project.

And above all, I want to express my special thanksgiving to ALMIGHTY GOD, for the
strength, commitment, good health and determination he gave me to be able to face and
overcome the challenges throughout this period.

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 ABSTRACT

The recent development of information technology has had a dramatic influence on

accounting information system; computers become smaller, faster, easier to use and less
expensive leading to the computerization of accounting system. This study aimed at
investigating the impact of computerized accounting systems on financial reports of
Micro Financial Institution’s. The main instrument of data collection was the
questionnaires. Quantitative data was analysed using both descriptive and inferential
analysis. Data collected through the open ended questions was analysed qualitatively.
The sample for the study consisted of 100 MFIs operating in the County; selected through
non-proportional sampling. The variable factored the regression model, Analysis of
Variance and Percentages. Data collected was analysed using descriptive statistics and
regression analysis in particular using the Statistical Package for Social Sciences (SPSS)
software. The study found out that taking all other independent variables at zero, a unit
increase in transparency leading to 0.478 increase in quality of financial reports whereas
a unit increase in leadership leads to 0.143 increase in quality of financial reports and a
unit increase in computerized accounting systems leads to 0.0915 increase in quality of
financial reports of MFIs. This transparency contributes most to quality of financial
reports of MFIs followed by leadership then computerized accounting systems. The
study recommends that in order to ensure that the MFIs have quality financial reports;
they should invest on computerized accounting systems to improve the speed, timeliness,
accuracy and relevance of the financial reports of their organizations. The finance
management should also follow the legal frameworks that balance the right to disclose
against the right of confidentiality. The management should ensure that they have an
open recruitment policy for staff based on merit in order to recruit qualified staff to
enhance the quality of work in the organizations.

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 LIST OF TABLE
Table 3.1 Operationalization of variables……………………………20-21
Table 4.1 Response rate…………………………………………………...23
Table 4.2 Quality of Financial Reports…………………………………...25
Table 4.3 Correlation Analysis…………………………………………….26
Table 4.4 Regression Analysis………………………………………………27

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 LIST OF FIGURES
Figure 4.1 Quality of Financial Report Indicators……………………………….26
Figure 4.2 Computerized Accounting System Indicators………………………….27
Figure 4.3 Leadership Indicators…………………………………………………….24
Figure 4.4 Transparency Indicators…………………………………………………...28

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 DEFINATION OF KEY TERMS
Microfinance Institution; These are institutions characterized by their commitment in
assisting low income earners and medium enterprise.
Microfinance; It is a type of banking services provided to low income earners who has no
access to financial service.
Computerized Accounting System; This involves the use of computers in processing of
quality accounting data into information to facilitate quick decision making through timely
preparation of financial reports and financial reporting.

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 CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Computerized accounting system involves the use of computers in processing quality
accounting data into information to facilitate quick decision making through timely
preparation of financial reports and financial reporting. In this case, it refers to the to a
software application that automates financial records and reporting processes faster, more
accurate and easier. Financial reports are generated by computerized accounting system and
it help to make business decision through timely preparation of financial reports and
analytical financial reporting. As information system covers a wide area and includes all the
areas in which a firm act, this research work has focused on a specific part, the effect of
computerized accounting system (CAS) to show that the computerized accounting system is
more advantageous than manual accounting.
Accounting itself refers to the process of identifying, measuring and communicating
economic information to permit informed and rational decision, computerized accounting is
defined by Alan and frank wood (2005) as a total suit of components that together comprises
all input, storage, transactions, processing, collecting and reporting of financial transaction
data.
1.1.2 Quality of Financial Reports
Financial reporting is a process of documenting and communicating financial activities
and performance over specific time periods. Companies use financial reports to organize
accounting data and report on current financial status. Saleemi (1981) defined financial
reporting as the process of supplying financial information which is reliable, accurate
and complete to the various stakeholders for making economic decisions. This is always
in form of financial statements such as statement of comprehensive income, statement
of financial position and cash flow statement and other financial annually reports which
provide an overview of the company’s current financial strength According to Samuel
(1991), financial reports are outputs of an accounting system and they are prepared at
the end of the year, hence the name final accounts. According to Horne (1998), the
financial reports should include a narrative description of the organization’s activities

8
and audited financial statements. He argues that these enable the stakeholders to see the
organization’s performance and the overall financial situation of the organization.
Samuel (1991), states that managers and accountants are usually required to defend the
results shown in the financial reports as part of the accountability process.
According to Indira, (2008), timeliness is an important characteristic of quality financial
information. To benefit users, financial information must be presented at the right time
otherwise it loses relevance. Relevance is also a characteristic of quality of financial
reports. Frank wood indicates that financial information is relevant if it is capable of
making a difference in decisions made by helping users to form predictions about the
outcomes of the past, present and future events either to confirm or correct prior
expectations. Comparability is another characteristic. According to Pallia (2007)
Understand ability as a quality of financial reporting that enables users to perceive the
significance of financial information. He argues that users are assumed to have
reasonable knowledge of business and willingness to study and understand the
information. This study will Base on Keating and Frumkim (2003) conceptual
framework, where Leadership, Transparency and accounting systems are determinants
of quality of financial reports.
It should be noted that, despite what some think of corruption in government, there is
also fraud in the private sector and MFIs are not above corruption. At time cost
effectiveness is not prioritised. Many feel that MFIs should be accountable to their
beneficiaries while others think that MFI should be directly answerable to the people
they serve. By having quality financial reports that is understandable, relevant and
transparent the financial information would be useful.

1.1.3 Effect of Computerized Accounting Systems on the Quality of Financial Reports

Theoretically it is expected that a computerised accounting system would result to a
quality financial reports. Through studies done by Carol (2002), it is easy to do
accounting functions using computerized accounting systems. Posting transactions to
the ledger, the principle of double entry can largely be automated when done through
the use of computerized accounting system. Evidence from academic studies suggests

9
that donors respond to accounting information in making their giving decisions. In 2010,
Gordon and colleagues outlined five best practice recommendations for annual reports
in the non-profit sector completeness, accessibility and transparency in financial
reporting, full disclosure and relevance. Mc Bride (2000) stated that managers cannot
easily satisfy statutory and donor reporting requirements such as profit and loss account,
balance sheet and customized reporting without using computerized accounting
systems. With the system in place, this can be done quickly and with less effort.
Computerized accounting systems ease auditing and have better access to required
information such as cheque numbers, payments, and other transactions which help to
reduce the time needed to provide this type of information and documentation during
auditing.
It was noted that organizations are not enjoying the benefit of computerization of
accounting system as they have continued to be inaccurate due to increased number of
interruptions due to system failure or breakdown and un-timeliness with its reliability
left in question. In other studies, Computerization saves time on transaction hence
leading to quality of financial reporting for instance timely, accurate and reliable
information can be generated (Lewis 1999).

1.2 Problem Statement

A problem statement is a concise description of an issue to be addressed or a condition to be
improved upon. The advancement of information and communication technology has
eventually led to the introduction of computerized accounting system. The many advantages
from the use of these systems have led many to believe that computerized accounting
systems are the engines for effective and efficient performance.
Despite the many advantages that come with computerized accounting systems, several
challenges still plague information technology with regards to computerized accounting
systems, some companies still use the manual accounting systems which are often
characterized by keeping a large number of books and are usually associated with errors in
calculations, recording a large number of transactions.

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Reasons for the use of this manual system can be attributed to factors such as the inadequate
supply of expert knowledge about the computerized accounting systems, high cost of
installation and maintenance, resistance to change, viruses.

1.3 Research Questions

 Can transparency affect the use of computerized accounting system on the quality of
financial reporting in micro finance institutions?
 Is there any relationship that exists between leadership and the quality of financial
reporting in MFIs with the used of CAS?
 Is there any relationship between CAS and Manual accounting system used in MFIs?

1.4 Objective of the Study

To establish the effect of computerized accounting system on the quality of financial report
on MFIs.
To find out the benefit of computerized accounting system over the manual accounting
system

To established the relationship between computerized accounting system and financial

report.

1.5 Hypotheses of Research Questions

They are tentative statements proven statistically. It can either be in a null (Ho) or alternative
form. But for the seek of the study, our hypotheses will be stated in a null form
HO1: Transparency has no effect on the use of CAS performed on the quality of financial
reporting in MFIs.
HO2: There is no relationship that exist between leadership and the quality of financial
reporting in MFIs using CAS
HO3: There is no relationship between CAS and manual accounting system.
1.6 Significant of the Study
The study findings will enhance MFIs capability to build mechanisms in order to
increase the quality of financial reports through computerised accounting systems.

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The donor agencies can use the findings of this study to identify what kind of technical
support they should provide the MFIs before giving them any funding in order to ensure
acceptable quality of financial reports.

The study findings will also assist MFIs in improving their fulfilment to donor
requirements and thus improve their capability to attract more funding and ensure their
organizational sustainability and thus meet the societal needs.

The study findings will be a basis for further research on the advantages of using
computerised accounting systems rather than manual systems in MFIs.

1.7 Delimitation of the Study

The study only covered MFIs in Makenene where entrepreneurs across all sectors were
considered and the findings can only be generalized to other MFIs in other parts of the
country.
1.8 Limitations of the Study
Since most of the respondents were business people, most of the time they were busy serving
customers and this meant that a lot of time was used in data collection since the researcher
had to wait till all the customers had been served. This however only applied to those
enterprises that had the owner as the person attending to the customers. Language is a great
barrier to good communication; some respondents were conversant with English language
used in the questionnaire while others were not.

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 CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction

Literature review is a survey of scholarly source on a specific topic. It provides an

overview of current knowledge, allowing you to identify relevant theories, methods, and
gap in the existing research. Financial accounting as an organizational function aims at
measuring, processing and communication financial information which is crucial for
business success as well as organization for effective decision making it a profit making
because they have to report to the stakeholders of the organization through financial
reports. However, there is inefficient financial reporting due to loss of records, delay in
preparation of records and its associated problems. This section reviews literature
important to the subject of this study.
Computerised accounting systems appear to have significant influence on the quality of
financial reports from previous empirical studies, Present review of literature shows that
studies have only attempted to evaluate the implementation of computerised accounting
systems on organisations, other studies related the governance with financial reports,
the gap exist in that not sufficient studies has gone to the depth of studying the effects
of computerised accounting systems on the quality of financial reports of MFIs.
2.1 Conceptual Review

A conceptual framework represents the researcher’s synthesis of the literature on how to

explain a phenomenon. It maps out the actions required in the course of the study, given his
previous knowledge of other researchers’ point of view and his observations on the subject
of research.

Computerized accounting system is a system that uses computer to input, process, store and
output accounting information in form of financial reports. It records all transactions that
routinely deal with the events that affect the financial position and performance of the entity.

2.1. Components OF Computerized Accounting Software

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The computerized accounting is based on the concept of data base; it is basic software which
allows access to the data contained in the database. The following are the components of
computerized accounting software.
1. Preparation of Accounting Documents: Computers help in preparing accounting
documents like cash memo, bills, invoices and accounting vouchers. Here computerized
accounting system has user defined templates which will provide faster, accurate entry of
transaction and therefore, all documentation and reports can be generated automatically.

2. Recording of Transaction: Everyday business transactions are recorded with the help of
computer software. Every account and transactions is assigned a unique code where the
grouping of account is done at the first stage. This process simplifies the work of recording
the transaction.

3. Preparation of Trial Balance and Financial Statements:

After recording of transactions, the data is transferred into ledger accounts automatically by
the computer. Trial balance is prepared by the computer to check accuracy of records, with
the help of trial balance; the computer can be programmed to prepare the statement of
comprehensive income and the statement of financial position

Benefits of Computerized Accounting Systems:

Computerized accounting offers several advantages vis-à-vis manual accounting, these are
summarized as follows;

 Speed:
Accounting data is processed faster by using a computerized accounting system than it is
achieved through manual efforts. This is because computers require far less time than human
beings in performing a task.
 Accuracy:
The possibility of error is eliminated in a computerized accounting system because the
primary accounting data is entered once for all the subsequent usage and processes in
preparing the accounting reports. Normally, accounting errors in a manual accounting

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system occur because of repeated posting of some original data by several times while
preparing different types of accounting reports.
 Reliability:
The computer system is well-adapted in performing repetitive operations. They are immune
to tiredness, boredom or fatigue. As a result, computers are highly reliable compared to
human beings. Some computerized accounting system relies heavily on computers; they are
relatively more reliable than manual accounting systems.
 Up-to-Date Information:
The accounting records, in a computerized accounting system are updated automatically as
and when accounting data is entered and stored. Therefore, latest information pertaining to
accounts get reflected when accounting reports are produced and printed. For example, when
accounting data pertaining to a transaction regarding cash purchase of goods is entered and
stored, the cash account, purchase account and also the financial statements (trading and
profit and loss account) reflect the impact immediately.
Automated Document Production: Most of the computerized accounting systems have
standardized, user defined format of accounting reports that are generated automatically.
The accounting reports such as Cash book, Trial balance, Statement of accounts are obtained
just by click of a mouse in a computerized accounting environment.

 Scalability:
In a computerized accounting system, the requirement of additional manpower is confined
to data entry operators for storing additional vouchers. The additional cost of processing
additional transactions is almost negligible. As a result, the computerized accounting
systems are highly scalable.
 Legibility:
The data displayed on computer monitor is legible. This is because the characters (alphabets,
numerals, etc.) are type written using standard fonts. This helps in avoiding errors caused by
untidy written figures in a manual accounting system.
 Efficiency:

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The computer-based accounting systems ensure better use of resources and time. This brings
out efficiency in generating decisions, useful information’s and reports.
 Quality reports:
The inbuilt checks and untouchable features of data handling relied upon.
Storage and Retrieval: The computerized accounting system allows the users to store data
in a manner that does not require a large amount of physical space. This is because the
accounting data is stored in hard-disks, CD-ROMs, floppies that occupy a fraction of
physical space compared to books of accounts in the form of ledger, journal and other
accounting registers. Besides, the system permits fast and accurate retrieval of data and
information.

2.2 Theoretical Review

This section dealt with the theories that were important to the subject of this study. The
theories included systems theory, positive accounting theory and resource-based review
theory.

2.2.1 Systems Theory

Kaufmann (1966) developed systems to explain historical development as a dynamic
process and was more fully developed by biologist Bertalanffy (1968). He argued that
everything is interconnected and therefore, we should study the interconnectedness as a
means of understanding the world. The systems theory method of analysis involves, first
the deconstruction of what is to be explained that is the phenomenon under
consideration, secondly, the formulation of explanation that account for the behaviour
of properties of the component separately and finally the synthesis of these explanations
into an aggregate understanding of the whole. General systems theory like other
innovative frameworks of thought passes through phases of ridicule and neglect. It has
benefited, however, from the parallel emergence and rise to eminence of cybernetics
and information theory. Systems theory is relevant to this study because the methods
proposed by the theory is to model complex entities created by multiple interaction of
components by abstracting from certain details of structure and component and
concentrating on the dynamics that define the characteristics functions, properties and

16
relationships that are internal or external to the system, Computerized Accounting
System is a computer based system, which combines accounting principles concepts as
well as the concept of information system to record, process, analyse and produce
financial information to its users to make economic decisions (Gelinas et al,2005). The
illustrative figure below relates the CAS to systems theory since it involves multiple
components which interact to generate usable results these are input, processing storage,
users and output.

Figure 2.1 a Computerized Accounting System Model

Storage

Input Processing Output

Feedback Users Feedback

Source: Gelinas et al, 2005

2.2.2 Positive Accounting Theory

Positive accounting theory was developed by Watts and Zimmerman in 1978 and 1986
which seek to predict and explain why managers elect to adopt particular accounting
methods in preference to others. Positive theories are concerned with explanation and
prediction (what does/ will happen) and are grounded in empirical data (Ryan et al,
2002). Since they are grounded in empirical data, they appear to offer accounting
researchers the prospects, the validity of Johnson and Kaplan’s (Relevance Lost)
criticisms of management accounting practice. This form of research draws on a wide
range of theoretical frameworks to address financial management accounting issues.

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Different research methods and methodologies are not viewed as competing but are
rather used together to provide a variety of insights into a wide range of management
accounting research questions (Ryan et al 2002).

2.2.3 Resource-Based View Theory

The origin of RBV can be traced back to earlier research, Barney (1991) developed the
strategic factor markets and the role of expectations can be seen within resource based
framework, Barneys framework proved a solid foundation upon which others might
build up, the current dominant view of business strategy resource-based theory or
resource-based view (RBV) of firms is based on the concept of economic rent and the
view of the company as a collection of capabilities. This view of strategy has a
coherence and integrative role that places it well ahead of other mechanisms of strategic
decision making (Kay, 2005).

The resource-based view (RBV) offers critical and fundamental insights into why firms
with valuable, rare, inimitable, and well organized resources may enjoy superior
performance (Barney, 1995). Building on the RBV, Hopes, Madsen and Walker (2003)
suggest a more expansive discussion of sustained differences among firms and develop
a broad theory of competitive heterogeneity. The Resource Based View’s lack of clarity
regarding its core premise and its lack of any clear boundary impedes fruitful debate.
Given the theory’s lack of specificity, one can invoke the definition based or hypothesis-
based logic. We can also argue that resources are but one potential source of competitive
heterogeneity. Competitive heterogeneity can obtain for reasons other than sticky
resources (or capabilities) (Hopes et al. 2003). Competitive heterogeneity refers to
enduring and systematic performance differences among close competitors. The theory
is relevant to this study because NGOs need to competitive in their performance in order
to achieve their objectives, mission and vision.

2.3 Empirical Studies on Computerized Accounting System

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The influence of computerized accounting systems on financial performance has been
thorough discussed. With the substantial increment in computerized accounting system,
there are several studies which have discussed this topic in details.
According to Okoye and Oghoghomeh (2011) conducted a study to investigate the impact
of computerized accounting system on external audit functions. The findings of the study
revealed that though auditor’s knowledge of computer makes significance difference on his
effective audit of a computerized accounting system, certain factors serve as limitation to its
effectiveness. Another study by Sam, Hoshimo and Tahir (2012) conducted a study on the
adoption of Computerized Accounting Systems (CAS) in Small and Medium Enterprises
(SMEs) in Malaysia and found that the adoption of computerized accounting systems among
SMEs is high. The study findings also showed that the innovativeness of the CEOs of the
SMEs contribute to the usage of CAS. On accounting information in Tanzania, the following
studies provide a comprehensive analysis of the empirical studies for this study. After a
comprehensive data analysis, the research results revealed that computer accounting system
has a significant impact in the overall financial control in Musoma district council. In light
of these results, the author recommended that there should be a system of administrators so
as to monitor and restrict unauthorized personnel from accessing the accounting system. To
further expand the overall discussion of empirical studies, Bahati (2014) assessed the impact
of computerized accounting on the performance of payroll accounting

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 CHAPTER THREE
RESEARCHE METODOLOGY
3.0 Introduction
This chapter described the research methodology that was used to guide the study under
the following sub-headings: the research design, target population, sample and sampling
design, data collection instruments, data collection and data analysis procedures.

3.1 Scope and Area of the Study

The study covered some micro finance institutions enterprises in the West region of
Cameroon. More specifically in Bafoussam. The study aimed to establish the effects of
computerized accounting system on the quality of financial report on micro finance
institutions in Bafoussam, Cameroon shall thus narrow down to Education and Training,
Peer pressure, Innovativeness, Registration process and Infrastructure. Geographically, the
study was carried out in Bafoussam, West region of Cameroon for ease of data collection
since a relatively smaller geographical area was covered.

3.2 Research Design

The study applied a descriptive survey research design. Descriptive survey research was
defined as scientific method in which information is collected without changing the
environment it includes surveys and fact-finding enquiries of different kinds, which
seeks to obtain information that discloses existing phenomenon Mugenda (2003). The
major purpose of descriptive research design is to describe the state of affairs as it exists
at present (Kothari, 2003) this design was successfully used by Kasimbu (2007). The
design involved primary research methods for the collection of primary data. The
justification for using this design was that it explored the existing status of two or more
variables at a given time.
3.3 Data Collection and Analysis
3.3.1 Study Population
For the purposes of our study the population designated comprised of selected MFIs in the
West Region, Bafoussam.
3.3.2 Data Validity and Reliability

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Validity of a questionnaire refers to the extent to which it measures what it claims to
measure (Mugenda & Mugenda, 2003). In testing validity, the researcher prepared
questionnaires and presented them to the supervisor for scrutiny and suggestions on the
relevance, clarity and suitability of the information. The supervisor then made
suggestions which were incorporated into the final draft. Reliability of research
instrument refers to the measure of degree to which research instrument yield consistent
result or data after repeated trials. To establish the reliability of the research instruments,
the researcher administered the questionnaires and pilot tested them using 15 (fifteen)
respondents after which the researcher made the necessary corrections to the
questionnaires.

3.3.3 Data Analysis

The data was collected and analysed using both quantitative and qualitative data analysis
methods. Quantitative method involved both descriptive and inferential analysis.
Descriptive analysis such as frequencies and percentages was used to present
quantitative data in form of tables and graphs. Data from questionnaire were then coded
and logged in the computer using Statistical Package for Social Science (SPSS V 20.0).
This involved coding both open and closed ended items in order to run simple
descriptive analyses to get reports on data status. Descriptive statistics involved the use
of absolute and relative frequencies, measures of central tendency and dispersion.
3.4. Model Specification.
The study also aimed to make use of various inferential statistics. The variables factored
in the multivariate regression model. The measures of the independent variables, using
the rating/Likert scales will be converted to mean values and then to percentages to
permit the application of linear regression model. The computerised accounting system
data will be obtained through a closed questionnaire. The questionnaire will be divided
into two sections. Section A will deal with Dependent variable and section B will deal
with the independent variable namely, Computerised Accounting Systems, Leadership
and Transparency.
The regression equation was of the form: Y = X1 + X2 + X3 + ε

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 Where;

Y = Quality of Financial Reports (QFR) as measured by Financial Report Information

X1 = Computerised Accounting Systems used (CAS)

X2= Leadership (L)

X3= Transparency (T)

ε = Margin of error/Disturbance term

Variabl Indicators Measure Scale Analysis

e Tool
QFR Do the financial reports meet timely deadlines? Likert
Timeliness
Do the financial reports users understand the Likert
Understand ability reports?
Do the reports generated meet the financial Likert/Ordinary
Relevance obligations? scale
Can the reports be used for decision making? Likert
Reliability
CAS Does CAS improve Likert Mean
Speed speed of financial entry
Does the use of CAS help improve the Likert
Timeliness timeliness of report generation?
Does the use of CAS improve the MFIs Likert/Ordinary
account record keeping and retrieval scale
Accuracy

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L Board/Managemen Are the management and Board self-governing? Likert Mean
t Independence-self
governing
Board/Managemen How useful is the management and board? Likert
t
Effectiveness/adhe
rence
to policies Adherence to policies and procedures

T Openness Does MFIs Share program progress? Ordinary Interval Mean

Honesty Is the NGO honest with operations? Resources? Ordinary scale

Reliability Is there electronic control of information? Likert

Table 3.1 Operationalization of variables

3.4.1 Test of Significance
Statistical significance of the independent variables will be determined by using the F-
test. T-test for coefficients significances will also be tested.

23
 CHAPTER FOUR

DATA ANALYSES, RESULT AND DECUSSION

4.0 Introduction

This chapter discusses the interpretation and presentation of the findings. The purpose
of the study was to analyse the effects of computerized accounting systems on financial
reports of Micro Finance Institutions. The researcher made use of frequency tables and
figures to present data.

4.1 Data Collection

The data was collected and analysed using both quantitative and qualitative data analysis
methods. Quantitative method involved both descriptive and inferential analysis.
Descriptive analysis such as frequencies and percentages was used to present
quantitative data in form of tables and graphs. Data from questionnaire were then coded
and logged in the computer. This involved coding both open and closed ended items in
order to run simple descriptive analyses to get reports on data status.
4.1.2 Primary Source
These area data collected first hand for example by the user or his paid agent, form original
source for the user’s express purpose. These referred to the data gathered as a result of direct
interaction with the respondents. Primary data are usually obtained from the field through
interviews questionnaires surveys, planned experimental observations or recording of
official transactions.
4.1.3 Questionnaire
A questionnaire is a “formalized set of questions for eliciting information”. This was the
main instrument of measurement used for the collection of primary data. It contains series
of written questions on the effect of computerized accounting system.
4.1.4 Secondary Source

These are data obtained second hand from published or recorded sources and used for a
purpose different from that of the agency that initially collected and published the data.

24
These are data gotten from reports, financial statements, account and budget plans,
magazines etc. In this case, the information was gotten from official documents of the MFIs,
varies research work on computerized accounting system, accounting journals, textbooks.

4.2 Quality of Financial Reports

The researcher sought to know the MFIs responses on the quality of financial reports, the
respondents agreed that the quality of the financial reports are good with the 80% agreeing
that the information in the reports are accurate and also said the reports helps in
accountability, that the reports are timely and relevant whereas 20% said the reports are
reliable an average.
Figure 1: DOSE COMPUTERISE ACCOUNTING SYSTEM ENHANCE THE
QUALITY OF FINANCIAL REPORTS THROUGH THE ACCOUNTABILITY OF
BANK ACCOUNTS IN MICRO FINANCE INSTITUTIONS?

Response N° of respondents Percentages (%) of response

Strongly agreed yes 4 80%

May be 1 20%

No idea 0 0%

Total 5 100%

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 N° OF RESPONDENTS

yes

total

I don’t know may be

Source by the author using field information (2022/2023)

Table 1 shows that, 4 persons who responded strongly agreed represent 80% of the total
number of respondent acknowledge the fact that, computerize accounting system enhance
the quality of financial report through the accountability of bank accounts in a MFI. While
on the other hand, 1-person respondent doubt to acknowledge the fact that computerize
accounting system enhance the quality of financial report through the accountability of bank
accounts in micro finance institutions.

4.2.1 Computerized Accounting System

The researcher further needed to know the effects of computerized accounting systems
on the quality of financial reports and thus found out that on average, the respondents
agree (4) that the accounting systems used in the MFIs are computerized accounting
system and (2) are neutral on whether rely on computerized accounting systems to
record data and only (1) respondents said that they used manual accounting system.

26
The factors that influence the choice of a computerized accounting system are the need
to improve quality of reports, the need to facilitate financial management
the positive impact of CAS on the MFIs performance and lastly if the accounting system
is user friendly.

Response N° of respondents % of response

YES 4 57.1%

NO 2 28.6%

I DON’T KNOW 1 14.3%

TOTAL 7 100%

Figure 4.2 Computerized Accounting Systems Indicators

N° OF RESPONDENTS

Yes

Total

No
Not sure

Source by the author using field information (2023)

The above table results that 4 person’s respondent giving 57.1% of the total
acknowledging that the accounting systems used in the MFIs are computerized

27
accounting system. (2) are neutral on the computerized accounting systems to record
data giving a percentage of 28.6% and only (1) respondents said that they used manual
accounting system giving a total of 14.3% showing no interest according to the question
asked.
4.2.3 Transparency
The researcher asked respondents the factors that affect transparency which involved,
first if the organization share the program progress to its shareholders, if they have
sufficient electronic control, the framework/right of confidentiality, Integrity of top
management, accountability of funds and current reports value in the future which
scored means of 3.9, 4.2, 3.7, 3.9, 4.0, 4.5 and 3.8 respectively as presented in the chart
below.

Figure 4.3 Transparency Indicators

Transparency
4.80
4.60
4.40
4.20 4.50
4.00
3.80 4.20
3.60 3.90 3.90 4.00
3.40 3.70 3.80
3.20
3.00
2.80
2.60
2.40
2.20
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
share program sufficient framework/right Integrity of top Accountability of current reports Acceptance of
e progress electronic of confidentiality management funds used in future the reports by
control users

Source by the author using field information (2023)

28
This will allow us to predict the quality of financial reports in any given time provided
we have the Computerised Accounting System.

It is clear CAS affects the quality of financial reports positively since all confidents are
positive.

4.3 Regression Analysis and Hypothesis Test

In order to determine the effects of computerized accounting systems of MFIs a model
was adopted. This study employed regression analysis where computerized accounting
system, leadership and transparency are independent variables and the quality of
financial reports is a dependent variable.

Table 4.4 Regression Analysis

Variables Labels Quality_Report_Y

Computerised Accounting System_x1 80 %

leadership_x2 57.1%

transparency_x3 constant Constant

Source by the author using field information (2023)

4.3.1 Interpretation of Findings

There is a strong positive relationship between CAS and quality of financial reports
since R is positive then it has a positive gradient. Above all the use of computerized
accounting system leads to a good quality of financial reporting of micro finance
institutions in Cameroon.

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 CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.0 Introduction

This chapter present the discussion of key data findings, conclusion drawn from the
findings highlighted and recommendation made there-to.

5.1 Summary
The study showed that quality of computerized accounting systems affects the quality
of financial reports of the MFIs to a great extent. The aspects of computerized
accounting systems affect the quality of reports of the MFIs to a great extent include
timeliness, speed, accuracy and quality of package used. It was observed that the quality
of the financial reports is good with the 90% agreeing that the information in the reports
are accurate. They said the reports helps in accountability and that the reports are timely
and relevant whereas 20% said the reports are averagely reliable.

It was noted also that The factors that influence the choice of a computerized accounting
system are the need to improve quality of reports, the need to facilitate financial
management, the positive impact of CAS on the performance of MFIs and lastly if the
accounting system is user friendly. This finding agrees with what Amveko (2016)
studied in which she aimed to identify the impact of computerized accounting
information systems on financial reporting in Kampala, the financial reports generated
conform to some of the quality attributes of good financial information. This was
emphasized by a positive correlation of response on quality attributes of timeliness and
accuracy though it was on a low scale her findings were that that computerized

The researcher found out that the factors that influence affect transparency including if
the organization share the program progress to its shareholders, if they have sufficient
electronic control, the framework/right of confidentiality, Integrity of top management,
accountability of funds and current reports value in the future which transparent in their
operation which contributes to the quality of financial reports.

30
5.2 Conclusion
The study concludes that computerized accounting systems factoring in its speed,
timeliness, accuracy and the possibility of producing quality data affects the quality of
financial reports of the MFIs. The drivers for leadership included the board and
management independence, effectiveness of both the board and MFIs management and
the technical knowhow of the staff enhances the quality of financial reports. The study
also deduced that transparency plays a role in enhancing the quality of financial reports.
The study finally concludes that transparency contribute most to quality of financial
reports of nongovernmental followed by leadership with computerized accounting
system contributing the least to the quality of financial report of nongovernmental
organizations.

5.3 Recommendations for policy

From the study findings, it was clear that computerized accounting system in terms of
its speed, timeliness, accuracy and quality of reports generated affects the quality of
financial reports of the MFIs. The study therefore recommends that in order to ensure
that the MFIs have quality understandable reports; they should invest in computerized
accounting system since it is seen to affect the financial reports to a great extent. The
study further recommends that leadership enhance financial reports at the organizations
to a great extent, the MFI management should increase leadership effectiveness in both
management and board. The study further recommends that the transparency of the
MFIs should continue being stable for a better general operation of its activities.

5.4 LIMITATIONS OF COMPUTERIZED ACCOUMNTING SYSTEM.

The study observed three limitations during this research study, the first limitation was
seen during data collection, in that the time was quite short to reach all respondents
given their geographic locations thus leading to the 80% respondents, secondly it was
noted that some questionnaires were not filled since the management did not respond
well and since the study adapted the drop and pick method of distributing the
questionnaires which relied majorly on the respondents ability to fill the questions
effectively, the researcher had no control over the respondents and lastly is that some

31
MFIs had incorrect records of their locations thus the researcher could not find the MFIs
at the location that is indicated by the MFI Coordination board data therefore leading
the researcher to go an extra mile of calling the organizations to confirm of their
locations thus leading to delays.

Despite the numerous benefits of Computerized Accounting System that can be listed they
are not without challenges. The impediments to implementing a CAS is costly perception
that the technology is not suited to the nature of the business (ABS 2000), and lack of IT
expertise (ABS 2000; Burges 2016).
Power Failure: S. NORA (Computerization of Society 2013). When dealing with accounting
programs, you should consider electric power as a major limitation of the system. Without
electricity, most company accounting systems are useless, no data can be input or reports
generated, any electrical fluctuation can have a negative impact on accounting data, deleting
information and creating confusion. Most organizations are faced with frequent power
failure that slows the rate at which operations are executed in organizations. This leads to
loss of data hence taking more to be retrieved.

Computer Virus: The major stressing challenges in the whole world are the problem of
computer viruses. S. NORA (Computerization of Society 2015), affirm that computer
viruses usually infect systems introduced via external storage devices which have already
been infected. This has led to loss of data most of which is very costly to get back as it will
need experts who are invited to install and design new packages. Some security concerns
can pose limitations on accounting software.

Computer Hacking S. NORA (Computerization of Society 2014), goes ahead to refer this as
to when individuals make unauthorized access to computerized systems especially via dial-
in-lines or across computer networks. This leads to loss of data and inconveniences to the
individual affected by the hackers.

Before converting from manual to computerized accounting system, planning is of great

importance. (Computerization of Society 2013). Hence need to consider the principle of
procedure, costs associated with new system, feasibility and reliability of the new system

32
(Computerization of Society 1981). Recommend 2 ways of changing a manual system to
computerized system. Direct or parallel method, however, the choice of the method to use
will depend on the nature, resources, objectives and purposes of the organization. Richard
Back and Rueben T. Hurns 1998 suggested that large scale; complex organizational change
can be conceptualized in movement from present to future state. All this would affect
organizational operation positively hence effectiveness.

5.5 Areas for Further Research

The study recommends three areas for further research; first more research should be
done on the effect of computerized accounting systems on the Non-Governmental
Organizations in Cameroon so as to allow generalization. Secondly, further research
should be done on the extent of adaption of computerized accounting systems by the
MFIs. Thirdly is that more research needs to be done on the advantages of computerized
accounting system compared to manual accounting systems on the quality of financial
reports in the County.

33
 REFERENCE

Amveko, A. (2011), Computerized Accounting Systems and Financial Reporting,

unpublished B.s, Makerere University, Kampala.

Boyce, J. (2004), The Accountability, Accessed on 21 July 2004 at

www.afpet.org/contntdocuments/marap04cover.pdf

Carol, L. C (2002). How Computers Has Simplified Accounting. http://www.yale.edu

Cook T. J. (2003), Linking Funding and Results: A development associate occasional

paper in democracy and development

Ebrahim, A. (2003), Accountability in Practice: Mechanisms for Donor NGOs.

Gelinas, U.J, Sutton S.G & Hunton J.E. (2005). Accounting information systems.

Gordon, T.P (2010) Five Dimensions of Effectiveness for Nonprofit Annual Reports
Non-profits Management and Leadership 21, 2, 209–228.

Hoopes, D.G., Madsen, T.L. and Walker, G. (2003), Guest editors' introduction to the
issue: why is there a resource-based view toward a theory of competitive
heterogeneity, Strategic Management Journal, 24, 10,889-902.

Kasimbu, J.M. (2007) The Extend of stakeholder Involvement in Strategy Formulation

Kay J. (2005) Strategy and the Delusion of Grand Designs Keating, E.K & Frumkin,
P. (2003), Assessing Non-Profit Making Financial

McBride, P. (2000). Guide to Computerizing your Accounting System. Retrieved on

Measures, Accountability and Evaluation, Non-Profit Sector Research Fund.

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 APPENDIX 1 (RESEARCH QUESTIONNAIRE)
QUESTIONAIRE ON COMPUTERISED ACCOUNTING SYSTEM ON THE
QUALITY OF FINANCIAL REPORTING

Dear respondent,

I am afinal year student in HEMIPT HIGHER INSTITUTUDE OF

PROFESSIONALISM AND TECHNOLOGYBAFOUSSAM conducting a purely
academic study as a partial requirement that leads to the award of the Bachelor of Business
Administration in Accounting (BBA). The questionnaire is designed for academic purposes
and for partial fulfilment of the requirement for the award of the bachelor of sciences (B.Sc.)

Administration. It’s only through your response that the work can be completed well.
Therefore, any information disseminated will be handled with maximum confidentiality.
Please spare a few of minutes of your time to answer the following questions, they mostly
involve ticking a response in the space provided and a few filling in.

TITLE: The Impact of Computerized Accounting Systems on the Financial

Reports of micro finance institutions the case of BAPCCUL

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36